CLASSES OF CORPORATIONS

KHO, ANTHONY MARTIN L.

CORPORATION LAW
UNIVERSIDAD DE MANILA
CLOSE CORPORATIONS
• A CLOSE CORPORATION, WITHIN THE MEANING OF THE REVISED
CORPORATION CODE, IS ONE WHOSE ARTICLES PROVIDE THAT:
– IT'S STOCKS OF ALL CLASSES, EXCLUSIVE OF TREASURY SHARE, SHALL
BE HELD OF RECORD BY NOT MORE THAN A SPECIFIED NUMBER OF
PERSONS, NOT EXCEEDING 20;
– ITS STOCK OF ALL CLASSES SHALL BE SUBJECT TO ONE OR MORE
SPECIFIED RESTRICTIONS ON TRANSFER;
– THAT THE CORPORATION SHALL NOT LIST ANY STOCK EXCHANGE OR
MAKE ANY PUBLIC OFFERING OF ITS STOCK OF ANY CLASS.
– NOTE THAT IT IS NOT CONSIDERED A CLOSE CORPORATION IF 2/3 OF
ITS VOTING STOCK OR VOTING RIGHTS IS OWNED OR CONTROLLED BY
ANOTHER CORPORATION, WHICH IS NOT A CLOSE CORPORATION
WITHIN THE MEANING OF THE REVISED CORPORATION CODE
CLOSE CORPORATIONS

• ANY CORPORATION CAN BE REGISTERED AS A CLOSE

CORPORATION EXCEPT:
– MINING
– OIL COMPANIES
– STOCK EXCHANGES
– BANKS
– INSURANCE COMPANIES
– PUBLIC UTILITIES
– EDUCATIONAL INSTITUTIONS
– CORPORATIONS VESTED WITH PUBLIC INTEREST
CLOSE CORPORATIONS

• THE ARTICLES OF INCORPORATION OF A CLOSE

CORPORATIONS MAY PROVIDE FOR:
– CLASSIFICATION OF SHARES AND RIGHTS,
QUALIFICATIONS OF HOLDING THE SAME, AND
RESTRICTIONS ON ITS TRANSFER;
– A CLASSIFICATION OF DIRECTORS INTO ONE OR MORE
CLASSES, EACH OF WHOM MAY BE VOTED SOLELY BY A
PARTICULAR CLASS OF STOCK;
– QUORUM OR VOTING REQUIREMENTS IN MEETINGS OF
STOCKHOLDERS OR DIRECTORS
CLOSE CORPORATIONS

• THE ARTICLES MAY INDICATE THAT THE BUSINESS

OF THE CORPORATION BE MANAGED BY
STOCKHOLDERS INSTEAD OF A BOARD OF
DIRECTORS, PROVIDED THAT THE STOCKHOLDERS
SHALL BE DEEMED DIRECTORS, AND THAT THE
STOCKHOLDERS SHALL BE SUBJECTED TO ALL OF
THE LIABILITIES A DIRECTOR MIGHT INCUR.
• IT MAY ALSO PROVIDE THAT ELECTION AND
APPOINTMENT OF OFFICERS BE DONE BY
STOCKHOLDERS INSTEAD OF A BOARD OF
CLOSE CORPORATIONS
• RESTRICTIONS IN THE RIGHT TO TRANSFER SHARES OF STOCK
SHALL BE APPEAR IN THE ARTICLES OF INCORPORATION, BYLAWS,
AS WELL AS THE STOCK CERTIFICATE, OTHERWISE IT SHALL NOT BE
BINDING UPON A BUYER/TRANSFEREE IN GOOD FAITH;
• SUCH RESTRICTIONS MUST NOT BE MORE ONEROUS THAN
GRANTING THE EXISTING STOCKHOLDERS OR CORPORATION THE
OPTION TO PURCHASE WITH SUCH REASONABLE TERMS,
CONIDTIONS OR PERIOD STATED;
• IF UPON EXPIRATION, NO STOCKHOLDER OR IF THE CORPORATION
FAILS TO EXERCISE THE OPTION TO PURCHASE, IT CAN THEN BE
SOLD TO ANY THIRD PERSON.
CLOSE CORPORATIONS
• IF A TRANSFEREE IS NOT ELIGIBLE TO HOLD A STOCK AND
IN SUCH STOCK, IT CONSPICUOUSLY SHOWS THE
QUALIFICATIONS OF ELIGIBILITY, SUCH PERSON IS
CONCLUSIVELY PRESUMED TO HAVE NOTICE OF THE FACT
OF HIS INELIGIBILITY;
• IF THE ARTICLES ON INCORPORATION STATES THE
NUMBER OF STOCKHOLDERS (NOT EXCEEDING 20), AND
SUCH STOCK CONSPICUOUSLY SHOWS IT NUMBER, AND
THE ISSUANCE OF SUCH EXCEEDS THOSE ALLOWED IN
THE ARTICLES, SUCH TRANSFEREE OF STOCK IS
PRESUMED TO HAVE NOTICE OF THIS FACT.
CLOSE CORPORATIONS
• IF A STOCK CERTIFICATE SHOWS A/THE RESTRICTIONS ON
TRANSFER, AND THE TRANSFEREE ACQUIRES THE STOCK
IN VIOLATION OF SUCH RESTRICTION, IT IS CONCLUSIVELY
PRESUMED THAT THE TRANSFEREE HAS NOTICE OF
ACQUISITION VIOLATIVE OF THE RESTRICTION.
• IF ANY OF THE THREE PRECEDING ITEMS WERE VIOLATED,
THE CORPORATION MAY REFUSE TO REGISTER THE
TRANSFER IN THE NAME OF THE TRANSFEREE.
• CONSENT OF ALL THE STOCKHOLDERS SHALL WORK TO
CURE ANY OF THE VIOLATIONS IN THE PRECEDING
SUBSECTIONS.
CLOSE CORPORATIONS
• AGREEMENTS BY ALL STOCKHOLDERS BEFORE THE
ORGANIZATION OF THE CORPORATION SHALL CONTINUE TO BE
VALID AND BINDING BETWEEN SUCH STOCKHOLDERS EVEN
AFTER THE ORGANIZATION'S INCORPORATION.
• A WRITTEN AGREEMENT BY 2 OR MORE STOCKHOLDERS MAY
PROVIDE THAT IN THE EXERCISE OF ANY VOTING RIGHT, THEIR
SHARES SHALL BE VOTED AS PROVIDED OR AS AGREED IN
ACCORDANCE WITH A PROCEDURE AGREED BY THEM
• NO PROVISION IN A WRITTEN AGREEMENT SHALL BE INVALIDATED
BETWEEN STOCKHOLDERS ON THE GROUND THAT SUCH
PROVISIONS SHALL MAKE THEM PARTNERS AMONG
THEMSELVES.
CLOSE CORPORATIONS
• A WRITTEN AGREEMENT AMONG STOCKHOLDERS SHALL
NOT BE INVALIDATED ON THE GROUND THAT IT RELATES
TO THE CONDUCT OF BUSINESS AS TO RESTRICT OR
INTERFERE WITH THE DISCRETION OR POWERS OF THE
BOARD OF THE DIRECTORS; PROVIDED THAT SUCH
AGREEMENT SHALL IMPOSE LIABILITIES FOR MANAGERIAL
ACTS IMPOSED ON DIRECTORS BY THE REVISED
CORPORATION CODE.
• STOCKHOLDERS ACTIVELY ENGAGED IN THE BUSINESS
MANAGEMENT SHALL BE HELD TO STRICT FIDUCIARY
DUTIES AND HELD PERSONALLY LIABLE FOR CORPORATE
TORTS UNLESS THE CORPORATION HAS ADEQUATE
LIABILITY INSURANCE.
CLOSE CORPORATIONS
• A MEEETING BY THE DIRECTORS WITHOUT DUE NOTICE
SHALL BE VALID IF:
– BEFORE OR AFTER SUCH MEETING, WRITTEN CONSENT
OF ALL DIRECTORS ARE OBTAINED;
– STOCKHOLDERS HAVE ACTUAL OR IMPLIED
KNOWLEDGE AND DID NOT OBJECT;
– DIRECTORS ARE ACCUSTOMED TO TAKING INFORMAL
ACTION THROUGH EXPRESS OR IMPLIED CONSENT OF
STOCKHOLDERS;
– ALL OF THE DIRECTORS HAVE EXPRESS OR IMPLIED
KNOWLEDGE OF THE ACTION AND THERE IS NO
OBJECTION IN WRITING.
CLOSE CORPORATIONS
• PREEMPTIVE RIGHT OF STOCKHOLDERS IN CLOSE
CORPORATIONS SHALL EXTEND TO ALL STOCK TO BE ISSUED,
INCLUDING REISSUANCE OF TREASURY SHARES, WHETHER
FOR MONEY, PROPERTY, OR PERSONAL SERVICES, OR IN
PAYMENT OF CORPORATE DEBTS, UNLESS OTHERWISE
PROVIDED IN THE ARTICLES OF INCORPORATION/
• ANY AMENDMENT TO REMOVE OR DELETE ANY PROVISION
SHALL REQUIRE THE AFFIRMATIVE VOTE OF AT LEAST 2/3 OF
THE OUTSTANDING CAPITAL STOCK, WHETHER WITH OR
WITHOUT VOTING RIGHTS, OR OF SUCH GREATER
PROPORTION PROVIDED FOR IN THE ARTICLES OF
INCORPORATION.
CLOSE CORPORATIONS
• THE SEC SHALL HAVE THE POWER TO ARBITRATE OVER DEADLOCKS, AND ISSUE
ORDERS SUCH AS:
– CANCELLING OR ALTERING PROVISIONS IN THE ARTICLES OF INCORPORATION,
BYLAWS, OR STOCKHOLDER'S AGREEMENT;
– CANCELLING, ALTERING OR ENJOINING A RESOLUTION OR ACT OF THE
CORPORATION, ITS DIRECTORS, STOCKHOLDERS, OR OFFICERS;
– DIRECT OR PROHIBIT ACTS OF DIRECTORS OR STOCKHOLDERS PARTY TO THE
ACTION;
– REQUIRE THE PURCHASE AT THEIR FAIR VALUE ANY SHARES OF A
STOCKHOLDER;
– APPOINT A PROVISIONAL DIRECTOR;
– DISSOLVE THE CORPORATION;
– GRANT SUCH OTHER RELIEF AS THE CIRCUMSTANCES MAY REQUIRE.
CLOSE CORPORATIONS
– THE SEC MAY APPOINT A PROVISIONAL DIRECTOR, SUCH
PERSON SHALL BE AN IMPARTIAL PERSON NEITHER A
STOCKHOLDER OR DIRECTOR OF THE CORPORATION AND ITS
AFFILIATES.
– HE IS NOT A RECEIVER AND DOES NOT HAVE THE POWERS OF
A CUSTODIAN OR RECEIVER.
– COMPENSATION FOR SUCH PROVISIONAL DIRECTOR SHALL BE
AGREED UPON BY THE DIRECTOR AND THE CORPORATION,
SUBJECT TO THE APPROVAL OF THE COMMISSION, WHICH MAY
FIX THE COMPENSATION ABSENT AN AGREEMENT OR IN THE
EVENT OF DISAGREEMENT BETWEEN THE PROVISIONAL
DIRECTOR AND THE CORPORATION.
CLOSE CORPORATIONS
– ANY STOCKHOLDER OF A CLOSE CORPORATION MAY COMPEL
THE CORPORATION TO PURCHASE SHARES HELD AT FAIR VALUE,
AND WHICH SHALL NOT BE LESS THAN THE PAR OR ISSUED
VALUE, WHEN THE CORPORATION HAS SUFFICIENT ASSETS IT ITS
BOOKS TO COVER ITS DEBTS AND LIABILITIES EXCLUSIVE OF
CAPITAL STOCK.
– A STOCKHOLDER MAY, BY WRITTEN PETITION TO THE
COMMISSION, COMPEL THE DISSOLUTION OF SUCH
CORPORATION WHENEVER THE DIRECTORS COMMIT FRADULENT,
ILLEGAL, DISHONETS, OPPRESSIVE, OR PREJUDICIAL ACTS TO
THE THE CORPORATION OR ANY OF ITS STOCKHOLDERS, OR IF
THERE IS MISAPPROPRIATION OR WASTAGE OF CORPORATION
ASSETS
EDUCATIONAL CORPORATIONS

– EDUCATIONAL CORPORATIONS SHALL BE GOVERNED BY SPECIAL LAWS AND

THE GENERAL PROVISIONS OF THIS CODE.
– TRUSTEES SHALL NOT BE LESS THAN FIVE NOR MORE THAN 15, PROVIDED
THAT BOARD OF TRUSTEES BE MULTIPLES OF FIVE.
– UNLESS OTHERWISE PROVIDED IN THE ARTICLES AND BYLAWS, THE TERM OF
OFFICE OF 1/5TH OF THE TRUSTEES SHALL EXPIRE EVERY YEAR, TRUSTEES
ELECTED THEREAFTER TO FILL VACANCIES OCCURRING BEFORE THE
EXPIRATION OF A PARTICULAR TERM SHALL HOLD OFFICE ONLY FOR THE
UNEXPIRED PERIOD.
– TRUSTEES ELECTED TO FILL VACANCIES SHALL HOLD OFFICE FOR FIVE YEARS.
– A MAJORITY OF THE TRUSTEES SHALL CONSTITUTE A QUORUM FOR THE
TRANSACTION OF BUSINESS.
– THE POWERS AND AUTHORITY OF TRUSTEES SHALL BE DEFINED IN THE
BYLAWS.
– FOR INSTITUTIONS ORGANIZED AS STOCK CORPORATIONS, THE NUMBER AND
TERM OF DIRECTORS SHALL BE GOVERNED BY PROVISIONS ON STOCK
CORPORATION
RELIGIOUS CORPORATIONS

• CLASSES OF RELIGIOUS CORPORATIONS

– CORPORATION SOLE
– RELIGIOUS SOCIETY
BOTH CAN BE FORMED BY AN ARCHBISHOP, BISHOP,
PRIEST, MINISTER, RABBI, OR OTHER PRESIDING ELDERS
OF A RELIGIOUS DENOMINATION, SECT, OR CHURCH FOR
THE PURPOSES OF MANAGING AND ADMINISTERING, AS
TRUSTEE, THE AFFAIRS, PROPERTY, AND TEMPORALITY
OF THEIR ORGANIZATION
RELIGIOUS CORPORATIONS

• THE ARTICLES OF INCORORATION SHALL INCLUDE

THE FOLLOWING INFORMATION:
– THAT SUCH OFFICER REPRESENTS THE RELIGIOUS
ORGANIZATION AND WANTS IT TO BECOME A
CORPORATION SOLE
– THAT THE RULES OF SAID ORGANIZATION DOES NOT
PROHIBIT IT TO BECOME A CORPORATION SOLE
– THAT THE OFFICER IS CHARGED WITH THE
ADMINITRATION AND MANAGEMENT OF AFFAIRS OF THE
RELIGIOUS ORGANIZATION
RELIGIOUS CORPORATIONS

• THE ARTICLES OF INCORORATION SHALL INCLUDE

THE FOLLOWING INFORMATION:
– THE MANNER BY WHICH ANY VACANCY OCCURRING IN THE
OFFICE OF THE APPLICANT IS REQUIRED TO BE FILLED,
ACCORDING TO THE RULES, REGULATION, OR DISCIPLINE OF THE
RELIGIOUS ORGANIZATION.
– THE PLACE WHERE THE PRINCIPAL OFFICE OF THE
CORPORATION SOLE IS TO BE ESTABLISHED AND LOCATED.
(MUST BE WITHIN THE PHILIPPINE TERRITORY)
*ARTICLES OF INCORPORATION MAY INCLUDE ANY OTHER PROVISION NOT CONTRARY TO LAW FOR
THE REGULATION OF THE AFFAIRS OF THE CORPORATIONTHAT THE RULES OF SAID ORGANIZATION
DOES NOT PROHIBIT IT TO BECOME A CORPORATION SOLE THAT THE OFFICER IS CHARGED WITH THE
ADMINITRATION AND MANAGEMENT OF AFFAIRS OF THE RELIGIOUS ORGANIZATION*
RELIGIOUS CORPORATIONS
• ARTICLES OF INCORPORATION MUST BE VERIFIED BY AFFIDAVIT OR
AFFIRMATION OF THE OFFICER, AND ACCOMPANIED BY A COPY OF
THE COMMISSION, CERTIFICATE OF ELECTION, OR LETTER OF
APPOINTMENT OF SUCH OFFICER, NOTARIZED
• FROM AND AFTER THE FILING WITH THE COMMISSION AND UPON
SUBMISSION OF ALL DOCUMENTS NEEDED IN THE PRECEDING
ARTICLE, SUCH OFFICER SHALL BECOME A CORPORATION SOLE
AND ALL OF THE TEMPORALITIES, ESTATE, AND PROPERTIES OF THE
ORGANIZATION SHALL BE ADMINISTERED BY HIM AND BE HELD IN A
TRUST AS A CORPORATION SOLE, FOR THE USE, PURPOSE,
EXCLUSIVE BENEFIT AND ON BEHALF OF THE ORGANIZATION.
RELIGIOUS CORPORATIONS
AS TO PROPERTY RELATIONS:
• THE CORPORATION SOLE MAY PURCHASE AND HOLD REAL AND PERSONAL
PROPERTY FOR THE USE OF IN CHURCH, CHARITABLE, BENEVOLENT, OR
EDUCATIONAL PURPOSES.
• THE CORPORATION MAY SELL OR MORTGAGE REAL PROPERTY BY OBTAINING AN
ORDER FROM THE RTC OF PROVINCE WHERE THE PROPERTY IS SITUATED UPON
PROOF THAT THERE A NOTICE HAS BEEN MADE THOUGH PUBLICATION OR AS
DIRECTED BY THE COURT AND THAT IT IS IN THE INTEREST OF THE CORPORATION
THAT SUCH PROPERTY BE SOLD OR MORTGAGED.
• APPLICATION TO SELL OR MORTGAGE MUST BE MADE BY PETITION, DULY
VERIFIED BY THE OFFICER AND MAY BE OPPOSED BY ANY MEMBER OF THE
ORGANIZATION, PROVIDED THAT IN CASES WHERE THE RULES, REGULATIONS,
AND DISCIPLINE OF THE ORGANIZATION REGULATE THE METHOD OF ACQUIRING,
HODING, SELLING AND MORTGAGING REAL AND PERSONAL PROPERTY, SUCH
RULES SHALL GOVERN, AND COURT INTERVENTION IS NOT NECESSARY
RELIGIOUS CORPORATIONS
WHEN THERE ARE VACANCIES:
• THE SUCCESSORS IN OFFICE OF ANY OFFICER IN A
COPORATION SOLE SHALL BECOME SUCH UPON FILING OF A
COPY OF THEIR COMMISSION, CERTIFICATE OF ELECTION, OR
LETTERS OF APPOINTMENT, DULY NOTARIZED, TO THE
COMMISSION
• DURING ANY VACANCY IN THE OFFICE OF THE OFFICER, THE
PERSONS AUTHORIZED BY THE RULES, REGULATIONS, OR
DISCIPLINE OF THE ORGANIZATION SHALL MANAGE THE
AFFAIRS, ESTATE, AND PROPERTIES OF THE COPROATION
SHALL EXERCISE ALL THE POWERS DURING SUCH VACANCY
RELIGIOUS CORPORATIONS
WITH REGARDS ITS DISSOLUTION:
• A CORPORATION SOLE MAY BE DISSOLVED AND ITS AFFAIRS
SETTLED VOLUNTARILY BY SUBMITTING TO THE COMMISSION A
VERIFIED DECLARATION OF DISSOLUTION SETTING FORTH:
• THE NAME OF THE CORPORATION
• THE REASON FOR WINDING UP AND DISSOLUTION
• THE AUTHORIZATION FOR THE DISSOLUTION
• THE NAMES AND ADDRESSES OF THE PERSONS WHO ARE TO
SUPERVISE THE WINDING UP OF THE AFFAIRS
• UPON APPROVAL OF SUCH DELCARATION OF DISSOLUTION, THE
CORPORATION SHALL CEASE ITS OPERATIONS EXCEPT FOR
PURPOSES OF WINDING UP ITS AFFAIRS
RELIGIOUS CORPORATIONS
RELIGIOUS SOCIETIES:
• UNLESS FORBIDDEN BY COMPETENT AUTHORITY, THE
CONSTITUTION, PERTINENT RULES, REGULATIONS, OR DISCIPLINE
OF THE RELIGIOUS ORGANIZATION, ANY RELIGIOUS DENOMINATION,
SECT, OR CHURCH, MAY UPON WRITTEN CONSENT, AND/OR AN
AFFIRMATIVE VOTE AT A MEETING CALLED FOR THE PURPOSE OF AT
LEAST 2/3 OF ITS MEMBERSHIP, INCORPORATE THE
ADMINISTRATION OF ITS TEMPORALITIES OR FOR THE MANAGEMENT
OF ITS AFFAIRS, PROPERTIES, AND ESTATE BY FILING WITH THE
COMMISSION, ARTICLES OF INCORPORATION VERIFIED BY AFFIDAVIT
OF THE PRESIDING ELDER, SECRETARY, CLER OR OTHER MEMBERS.
RELIGIOUS CORPORATIONS
RELIGIOUS SOCIETIES:
• SUCH VERIFIED AFFIDAVIT SHALL SET FORTH THE FOLLOWING:
– THAT THE RELIGIOUS ORDER, DIOCESE, SYNOD, OR DISTRICT ORGANIZATION IS A RELIGIOUS
ORGANIZATION OF A RELIGIOUS DENOMINATION, SECT, OR CHURCH;
– THAT AT LEAST 2/3 OF ITS MEMBERS HAS GIVEN CONSENT THROUGH WRITING OR HAS VOTED TO
INCORPORATE AT A DULY CONVENED MEETING OF THE BODY;
– THAT THE INCORPORATION IS NOT FORBIDDEN BY COMPETENT AUTHORITY, THE CONSTITUTION,
RULES, REGULATIONS, OR DISCIPLINE OF THE RELIGIOUS ORGANIZATION OF WHICH IT FORMS PART;
– THAT IT DESIRES TO INCORPORATE FOR THE ADMINISTRATION OF ITS PROPERTIES, AFFAIRS, AND
ESTATE;
– THE PLACE IN THE PHILIPPINES WHERE THE PRINCIPAL OF THE OFFICE IS TO BE ESTABLISHED AND
LOCATED;
– THE NAMES, NATIONALITIES, AND RESIDENCE ADDRESS OF THE TRUSTEES, NOT LESS THAN FIVE
NOR MORE THAN FIFTEEN, ELECTED TO SERVE FOR THE FIRST YEAR OR SUCH OTHER PERIOD AS
MAY BE PRESCRIBED BY THE LAWS OF THE ORGANIZATION,
ONE PERSON CORPORATIONS
• ONE PERSON CORPORATIONS ARE A SINGLE STOCKHOLDER
CORPORATIONS FORMED BY A NATURAL PERSON, TRUST, OR ESTATE.
• THE FOLLOWING CANNOT INCROPORATE AS ONE PERSON
CORPORATIONS:
– BANKS AND QUASI-BANKS
– PRE-NEED, TRUST, INSURANCE, PUBLIC AND PUBLICLY LISTED
COMPANIES
– NON-CHARTERED GOVERNEMENT-OWNED AND CONTROLLED
CORPORATIONS
– NATURAL PERSONS LICENSED TO PRACTICE A PROFESSION FOR
THE PURPOSE OF EXERCISING SUCH PREFESSION, UNLESS
OTHERWISE PROVIDED BY SPECIAL LAWS.
ONE PERSON CORPORATIONS
• THERE IS NO MINIMUM REQUIRED CAPITAL STOCK FOR ONE
STOCK CORPORATIONS EXCEPT AS PROVIDED BY SPECIAL
LAWS, NOR SHALL IT BE REQUIRED TO FILE CORPORATE
BYLAWS.
• ITS ARTICLES OF INCORPORATIONS SHALL CONTAIN THE
FOLLOWING:
– IF A SINGLE STOCKHOLDER IS A TRUST OR ESTATE, THE NAME, NATIONALITY,
AND RESIDENCE OF THE TRUSTEE, ADMINISTRATOR, EXECUTOR, GUARDIAN,
CONSERVATOR, CUSTODIAN, OR OTHER PERSON EXERCISING FIDUCIARY
DUTIES TOGETHER WITH THE PROOF OF SUCH AUTHORITY TO ACT ON BEHALF
OF THE TRUST OR ESTATE;
– NAME, NATIONALITY, RESIDENCE OF THE NOMINEE AND ALTERNATE NOMINEE,
AND THE EXTENT, COVERAGE, AND LIMITATION OF THE AUTHORITY
ONE PERSON CORPORATIONS
• THE SINGLE STOCKHOLDER SHALL BE THE SOLD DIRECTOR AND
PRESIDENT OF THE CORPORATION, AND WITHIN FIFTEEN DAYS OF
THE ISSUANCE OF ITS CERTIFICATE OF INCORPORATION, BE TASKED
TO APPOINT A TREASURER, CORPORATE SECRETARY, AND OTHER
OFFICERS AS IT MAY DEEM NECESSARY, AND NOTIFY THE SEC
WITHIN 5 DAYS FROM THEIR APPOINTMENT.
• THE STOCKHOLDER CANNOT BE THE CORPORATE SECRETARY, BUT
IF HE IS THE TREASURER, HE SHALL GIVE A BOND TO THE SEC
PROVIDED THAT HE SHALL ALSO SUBMIT AN UNDERTAKING IN
WRITING TO FAITHFULLY ADMINISTER THE FUNDS RECEIVED AS
TREASURER, AND TO DISTUBRSE THE SAME ACCORDING TO THE
ARTICLES OF INCORPORATION; SUCH BOND SHALL BE RENEWED
EVERY 2 YEARS OR AS MAY BE REQUIRED.
ONE PERSON CORPORATIONS
• THE CORPORATE SECRETARY SHALL:
– BE RESPONSIBLE FOR THE MAINTAINING OF THE BOOKS AND RECORDS OF
THE CORPORATION;
– NOTIFY THE NOMINEE OR ALTERNATE NOMINEE OF THE DEATH OR
INCAPACITY OF THE STOCKHOLDER, GIVEN WITHIN 5 DAYS AFTER SUCH
OCCURRENCE;
– NOTIFY THE COMMISSION OF THE DEATH OF THE STOCKHOLDER WIHTIN 5
DAYS OF SUCH OCCURRENCE AND STATING IN THE NOTICE THE NAMES,
RESIDENCE ADDRESSES, AND CONTACT DETAILS OF ALL KNOWN LEGAL
HEIRS;
– CALL THE NOMINEE OR ALTERNATE NOMINEE AND THE KNOWN LEGAL
HEIRS TO A MEETING TO ADVISE THE LEGAL HEIRS WITH REGARD TO,
AMONG OTHERS, ELECTION OF A NEW DIRECTOR, AMENDING THE
ARTICLES OF INCORPORATION, AND OTHER CONSEQUENTIAL MATTERS.
ONE PERSON CORPORATIONS
• THE NOMINEE AND ALTERNATE NOMINEE SHALL, IN THE EVENT OF THE DEATH OF THE STOCKHOLDER,
TAKE OVER AS DIRECTOR OF THE CORPORATION AND MANAGE ITS AFFAIRS
• THE ARTICLES OF INCORPORATION SHALL STATE THEIR NAMES, RESIDENCE ADDRESSES, CONTACT
INFORMATION, AS WELL AS THE EXTENT AND LIMITATIONS OF THEIR AUTHORITY IN MANAGING THE
CORPORATION; THEIR WRITTEN CONSENT SHALL ALSO BE ATTACHED TO THE APPLICATION FOR
INCORPORATION, AND SUCH CONSENT MAY BE WITHDRAWN IN WRITING ANYTIME BEFORE THE DEATH
OR INCAPACITY OF THE STOCKHOLDER.
• IN CASE OF INCAPACITY, THE NOMINEE SHALL SIT AS DIRECTOR AND MANAGE THE AFFAIRS UNTIL IT
SHALL BE POSSIBLE FOR THE STOCKHOLDER TO REASSUME SUCH DUTIES
• IN CASE OF DEATH, HE SHALL SIT AS DIRECTOR UNTIL SUCH TIME THAT THE LEGAL HEIRS ARE
DETERMINED, AND THE HEIRS HAVE DESIGNATED ONE OF THEM OR HAVE AGREED THAT THE ESTATE
SHALL BE THE STOCKHOLDER
• THE ALTERNATE NOMINEE SHALL SUBSTITUTE FOR THE NOMINEE IN CASE OF THE LATTER'S
INCAPACITY, DEATH, OR REFUSAL TO DISCHARGE FUNCTIONS AS DIRECTOR AND MANAGER OF THE
CORPORATION.
• THE STOCKHOLDER MAY CHANGE THE NAME OF THE NOMINEE AND ALTERNATE NOMINEE ANYTIME BY
SUBMITTING TO THE COMMISSION THE NAMES, ADDRESSES, AND CONTACT INFORMATION OF THE NEW
NOMINEE AND ALTERNATE NOMINEE
ONE PERSON CORPORATIONS
• THE ONE PERSON CORPORATION SHALL SUBMIT THE FOLLOWING WITHIN SUCH PERIOD AS
THE COMMISSION MAY PRESCRIBE:
– ANNUAL FINANCIAL STATEMENTS AUDITED BY AN INDEPENDENT CPA, PROVIDED THAT
IF THE ASSETS OR LIABILITIES IS LESS THAN P600,000.00, THE FINANCIAL STATEMENTS
SHALL BE CERTIFIED UNDER OATH BY THE TREASURER AND PRESIDENT;
– A REPORT CONTAINING EXPLANATIONS AND COMMENTS BY THE PRESIDENT ON EVERY
QUALIFICATION, RESERVATION, OR ADVERSE REMARK BY THE AUDITOR IN THE
LATTER'S REPORT
– A DISCLOSURE OF ALL SELF-DEALINGS AND RELATED PARTY TRANSACTIONS ENTERED
INTO BETWEEN THE CORPORATION AND THE STOCKHOLDER;
• OTHER REPORTS AS THE COMMISSION MAY REQUIRED.THE FISCAL YEAR SHALL BE SET
FORTH IN ITS ARTICLES OF INCORPORATION, OR IN THE ABSENCE THEREOF, THE
CALENDAR YEAR.
• FAILURE TO SUBMIT SUCH REPORTORIAL REQUIREMENT 3 TIMES WITHIN A PERIOD OF 5
YEARS MAY ALLOW THE COMMISSION TO PUT THE CORPORATION UNDER DELINQUENT
STATUS.
ONE PERSON CORPORATIONS
RULES ON LIABILITY:
• THE STOCKHOLDER HAS THE BURDEN OF PROVING THAT THE
CORPORATION WAS ADEQUATELY FINANCED.
• THE STOCKHOLDER SHALL BE JOINTLY AND PERSONALLY
LIABLE FOR THE DEBTS AND OTHER LIABILITIES IF HE CANNOT
PROVE THAT THE PROPERTY OF THE CORPORATION IS
INDEPENDENT FROM HIS OWN PERSONAL PROPERTY.
• THE PRINCIPLE OF PIERCING THE CORPORATE VEIL OF FICTION
APPLIES TO ONE PERSON CORPORATIONS
ONE PERSON CORPORATIONS
• ORDINARY CORPORATIONS CAN BE CONVERTED INTO ONE
PERSON CORPORATIONS AND VICE VERSA
• ORDINARY CORPORATION TO ONE PERSON CORPORATION
ONLY NEED TO APPLY FOR CONVERSION AND SUBMIT ALL
DOCUMENTS AS THE SEC SHALL REQUIRE.
• ONE PERSON CORPORATIONS WISHING TO BE CONVERTED
INTO AN ORDINARY CORPORATION SHALL FILE A NOTICE TO
THE SEC WITHIN 60 DAYS OF THE OCCURENCE OF THE
CIRCUMSTANCES LEADING TO THE CONVERSION. IF ALL THE
REQUIREMENTS ARE COMPLIED WITH, THE SEC SHALL ISSUE A
CERTIFICATE OF FILING OF AMENDED ARTICLES OF
INCORPORATION